The SEC charged Kim Kardashian over promoting Ethereum Max tokens on Instagram as she failed to comply with the regulations on promoting financial products.
Although Kim Kardashian did not accept or refute the charges, she has agreed to pay $1.26 million in fines.
Speaking on the matter, the SEC Chair Gary Gensler said that investment products that influencers promote are not always right for investors.
The U.S. Securities and Exchange Commission (SEC) brought charges against reality television star Kim Kardashian and slapped a $1.26 million penalty for failing to disclose payments she received for promoting a cryptocurrency on social media.
Kardashian did not accept or refute the claims but has agreed to pay the fine and will also stop pushing crypto for three years, the SEC said in a statement on Monday.
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If you didn’t already know, Kim Kardashian is among the most followed celebrities globally. At the time of writing this article, she had over 73 million Twitter followers and more than 331 million followers on Instagram.
Such massive popularity often translates into a fair share of promotional opportunities, including in the crypto space. So, Kardashian, too, received such promotional opportunities for posting about various cryptocurrencies on social media, and one of her posts caught the SEC’s attention.
Which post are we referring to here? Kardashian’s promotional Instagram post on Ethereum Max tokens in September last year contained a link to the EthereumMax website, which provided instructions on purchasing EMAX tokens.
Ethereum Max reportedly paid Kardashian $250,000 for this post, which she failed to disclose to the SEC, as required under the regulations that make it mandatory for any person promoting a financial product to disclose the compensation amount, as well as the nature and source of payment to the regulatory body. This is why the SEC filed charges against Kardashian and made her pay penalties.
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Referring to the SEC’s charges against Kardashian, the SEC Chair Gary Gensler said, “This case is a reminder that, when celebrities or influencers endorse investment opportunities, including crypto asset securities, it doesn’t mean that those investment products are right for all investors.”
He also tweeted that “any celebrity or influencer’s incentives aren’t necessarily aligned with yours” and that the public shouldn’t confuse the skills of celebrities “with the very different skills needed to offer appropriate investment advice.”
No, this is not the first celebrity to be barred for not disclosing compensation for cryptocurrency promotions. The SEC had also barred the American boxer Floyd Mayweather, Hollywood star Steven Seagal, and “DJ Khaled” from promoting crypto assets previously.
Simply put, the SEC is making a statement of sorts with its action against these celebrities that it will no longer tolerate them breaking the law while promoting what it calls unregistered securities. So, the stars will have to play by the rules, or the SEC will make them face the music.
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